Penn West Announces Financial Trouble

Photo credit: Reuters

Canadian oil and gas producer Penn West Petroleum Ltd said this morning it may be in default on its financial covenants at the end of the second quarter, raising doubts about its ability to continue as a going concern.

According to Reuters, as of March 31st Penn West had long-term debt of $1.86 billion, or $1.44 billion at current exchange rates.

The company said it was in talks with lenders on amending its financial covenants, which if successful would reduce the risk of default. The company said it would try to raise money by selling more assets and seeking funding from investors.

Similar to other oil and gas companies, the Calgary-based company is suffering from a near-60 per cent slump in oil prices since mid-2014.

Penn West’s net loss narrowed to $100 million-dollar, or 20 Canadian cents per share, in the first quarter ending on March 31. That compares to a $248 million-dollar, or 49 Canadian cents per share, quarterly loss a year earlier.

Total production in the quarter fell 18.9 per cent to 77,010 barrels of oil equivalent per day.

As of Friday’s close of $1.05/share, the company’s Toronto-listed shares had fallen about 59 per cent in the past year and 10.3 per cent since the start of this year.

Story courtesy Reuters/Business News Network: http://www.bnn.ca/News/2016/5/16/Penn-West-raises-doubts-about-its-future.aspx